An employer-provided non-cash benefit that must be included in the employee\'s gross wages and subjected to income tax withholding and FICA. Common examples include personal use of a company vehicle and cash-equivalent gift cards.
Why Taxable Fringe Benefit matters for employers
Common taxable fringe benefits include personal use of a company vehicle (valued using the IRS annual lease value or cents-per-mile method), cash-equivalent gift cards, employer-paid gym memberships, moving expense reimbursements, and employer-provided spousal benefits on health insurance when the spouse does not qualify as a tax dependent. These must be identified, valued, and added to payroll for withholding purposes.
Employers who fail to report taxable fringe benefits create W-2 underreporting, resulting in employee back taxes and employer FICA underpayments. Year-end reconciliation of fringe benefits is a critical step in the payroll close process. BEG tracks and imputes taxable fringe benefits as part of managed payroll.
How BEG handles Taxable Fringe Benefit for clients
BEG Managed Payroll handles Taxable Fringe Benefit as part of a fully managed payroll service at $25-$45 per employee per month. Clients do not need to track compliance rules, filing deadlines, or calculation methods related to Taxable Fringe Benefit on their own. Everything is included. Learn about BEG Managed Payroll.
Frequently asked questions
Do employers have to manage Taxable Fringe Benefit themselves?
No. A managed payroll provider handles Taxable Fringe Benefit as part of full-service payroll. BEG manages this for clients at $25-$45 PEPM with no system migration required.
What happens if Taxable Fringe Benefit is handled incorrectly?
Errors related to Taxable Fringe Benefit can trigger IRS penalties, state agency assessments, or employee disputes. Catching and correcting errors before filing is far less costly than after-the-fact corrections.
How does BEG handle Taxable Fringe Benefit for managed payroll clients?
BEG tracks, calculates, and remits everything related to Taxable Fringe Benefit as part of fully managed payroll. Clients do not need to monitor compliance -- that is included in the service at $25-$45 PEPM.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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